Price Search and Airlines 1 History Price search for airfares used - - PowerPoint PPT Presentation

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Price Search and Airlines 1 History Price search for airfares used - - PowerPoint PPT Presentation

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Price Search and Airlines 1 History Price search for airfares used to be very difficult---in many cases had to be performed by a trained professional. Even after computerized search and ticketing (e.g. Sabre), price search by customers

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Price Search and Airlines

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SLIDE 2

History

  • Price search for airfares used to be very

difficult---in many cases had to be performed by a trained professional.

  • Even after computerized search and ticketing

(e.g. Sabre), price search by customers had to be performed through a series of phone calls.

  • The internet has transformed price search for

airline tickets.

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Examples of Airline Price Search Sites

  • Expedia
  • Travelocity
  • Orbitz
  • dohop
  • Kayak
  • Skyscanner

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How would we expect airlines to respond? Low prices and obfuscation

  • Flights much cheaper than 20 years ago in real

terms

  • Preventing price comparison sites from listing

their flights (Southwest, Ryanair)

  • Selling amenities as add-ons (luggage, snacks,

pillows)

  • Class proliferation

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  • Compare with

CPI increase of 47%

Image is in the public domain. Courtesy of the United States Department of Transportation. Image is is in the public domain. Courtesy Of the United States Department of Labor.

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Airlines Add-on Fees

  • Lushing, Dustin. “Airlines Scored $22.1B in

Add-on Fees Last Year.” Newser. July 25, 2012.

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Shopbots versus database systems

  • Shopbots search for items for sale, scrape

prices, and list all they can find

  • They may have some “sponsored listings,” ad

revenue, or consumer fees

  • Websites can take many legal and technical

steps to frustrate scraping programs and/or post misleading information

  • Relatively easy to manipulate

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Shopbots versus database systems

  • Database systems require cooperation of

listing merchant (and typically charge either listing or clickthrough fees)

  • They can impose rules to try to ensure

efficient price search and mitigate obfuscation

  • They do not have as wide coverage as

shopbots

  • Movement towards database systems

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MIT OpenCourseWare http://ocw.mit.edu

14.27 Economics and E-Commerce

Fall 2014 For information about citing these materials or our Terms of Use, visit: http://ocw.mit.edu/terms.